Factors Affecting Consumer Choice and Willingness to Pay for Milk Attributes

This study used weekly scanner data to determine within the milk market the factors that affect consumer choice of non-rBST and organic products and the implications for the development of niche markets. This was accomplished by first understanding what product attributes affected demand for milk and then determining how much consumers were willing to pay for these attributes. The former was done within the multinomial logit framework while the latter used the hedonic price model to infer WTP. Results showed the price effect for rBST-free was the largest while the price effect for organic was the smallest and that consumers were willing to pay more for both rBST-free and organic milk compared to conventionally produced milk